Labour Law

Outsourcing in Chile

Outsourcing: When foreign companies are offered to provide services in Chile usually during the construction of new plants, there are 3 main topics that they have to assess.

1.- Hiring people

You can bring your technicians from abroad and you can pay them from abroad and they will be eligible for a special working visa. However, if they stay in Chile for longer than 6 months you might end with a permanent establishment in Chile and being subject to taxation in Chile for the services provided.

If you decide to hire someone in Chile, local or foreigners, you will need a branch or form a local company. It is unlikely that you will find someone willing to hire the manpower you need, unless you use special companies formed for that purpose, because if you don’t pay their social security, the manager of the company who hired them will be liable himself for the payment and can even end up in jail for not paying.

2.- Outsourcing: Your obligations towards the Principal

Outsourcing in Chile is allowed but is subject to many regulations. The Chilean law for contractors and subcontractors, that amended the Labor Code, sets forth several principles to secure the contractors and subcontractors employee’s rights.

The law provides that the contractor’s employees the right to sue either his own employer or the owner of the site or both at his own choice for unpaid salary and holidays as well as compensation for dismissal. In accordance to the law, to avoid joint and other liabilities, the owner of the site shall ask the contractor for a form, given by the Labor Direction, that states that all legal obligations related to its employees are paid, including salaries and social security. This will allow him in case of non- payment not to be jointly responsible with the contractor or subcontractor.

3.- Health and safety obligations in the work field

Not only you, but also and, also the owner of the site, the so-called Principal, have to make sure the that the site is a safe workplace.

The law prescribes that a regulation will lay down all the specific requirements that the owner of the site should fulfill.

The Principal has to give the contractors and subcontractors a handbook containing all the safety rules inside the working field and it is entitled to do regular checks to make sure the contractors and subcontractors stick to those rules.

Last modified: 16/04/2020